Bitcoin Lacking Fresh Catalyst to Rise More Considerably — Market Talk

1148 GMT - Bitcoin rises marginally as investor sentiment is broadly constructive but the cryptocurrency sector appears to be looking for a new catalyst to push prices meaningfully higher, Trade Nation analyst David Morrison says in a note. "The tone remains cautiously optimistic as traders continually assess the broader risk backdrop." Bitcoin is stuck in a range of $101,000 to $105,000 following its recent rally from lows reached in April. The cryptocurrency rises 0.2% to $103,702, according to LSEG. It reached a three-and-a-half-month high of $105,716 Monday after the U.S. and China agreed to temporarily lower tariffs, recovering from the April low of $74,445. ([email protected])1132 GMT - From the perspective of U.S. bond-market participants, soft inflation data sent out an ambivalent signal, says LBBW's Elmar Voelker in a note. The data support the recent return of economic confidence in the U.S. but the consumer price data is also dampening concerns about rampant inflation, the senior fixed income analyst says. "Thus, in itself, limiting the potential for a further advance of the bond bears for the time being." The risk of a sustained upturn in U.S. inflation therefore clearly isn't high on the list of investor concerns, Voelker says. ([email protected])1110 GMT - The cost of insuring euro-denominated credit against default using credit default swaps falls due to renewed risk appetite due to easing trade tensions. The iTraxx Europe Crossover index which tracks euro credit default swaps declines 3 basis points to 297bps, S&P Global Market Intelligence data show. ([email protected])1054 GMT - Bond investors will have some concern about inflation and having some inflation-linked bond exposure alongside other higher yielding assets could be helpful to portfolios, says AXA Investment Managers' Chris Iggo in a note. Lower energy prices have helped recently and there was no evidence of tariff pass-through to final prices yet, the chair of the AXA IM Investment Institute and CIO of AXA IM Core says. However, "it still looks like it will be difficult to get inflation to, or below, 2.0% with annual inflation rates seemingly stable at current levels in the U.S., Eurozone and the U.K.," he says. There is also upside risk from the tariffs, he says. ([email protected])1025 GMT - Switzerland's economy was on a tear before the trade-tariff shock hit, though that shouldn't persuade the Swiss National Bank to pare back its rate-cutting cycle, Pantheon Macroeconomics economists Claus Vistesen and Melanie Debono say in a note. Swiss GDP grew 0.7% on quarter in the first three months of the year, though that growth is unlikely to stoke inflation, which is currently at zero. Indeed, growth is slowing, with first-quarter growth in industry spurred by front-running the threat of tariffs. "Growth is now slowing and will fall below zero in early 2H, though we still think Switzerland will outperform the eurozone," the economists say. The SNB will likely cut again in June, taking rates into negative territory, they add. ([email protected])1025 GMT - The U.K. government should implement new spending cuts or tax hikes at the autumn budget statement, as "such discipline should lower the risk premium investors demand to hold gilts," Andrew Wishart, Berenberg's senior U.K. economist, says in a note. Investors are skeptical about the U.K.'s fiscal sustainability goals, which has led to higher U.K. government borrowing costs, he says. ([email protected])1016 GMT - Yields on U.K. long-dated government bonds, or gilts, are the highest among developed-market peers, indicating that investors are unconvinced that the government will achieve its fiscal tightening goals, Andrew Wishart, Berenberg's senior U.K. economist says in a note. "Poor recent public finances data have raised doubts over the government's plan to reduce the fiscal deficit," he says. The U.K. 30-year gilt yields last trade at 5.361%, while U.S. 30-year Treasury yields trade at 4.872%, Tradeweb data show. ([email protected])1009 GMT - Possible loosening of U.K.'s public spending rules to accomodate increased defense spending and avoid raising taxes at the autumn budget is likely to push up borrowing costs, Berenberg's Andrew Wishart says in a note. "Continuing to delay fiscal consolidation by loosening the fiscal rules would cause another spike in gilt yields, hastening the deterioration in the public finances by raising debt interest costs," he says. In January, the 10-year gilt yields jumped to 4.921%, a high last seen in 2008, and the 30-year gilt yields climbed to 5.455%, Tradeweb data showed, due to concerns about U.K.'s fiscal sustainability. The 10-year and 30-year gilt yields last trade at 4.614% and 5.358%, respectively. ([email protected])1007 GMT - The South African hovers near five-month highs against the dollar hit overnight on bets South Africa's central bank could lower its inflation target after the finance ministry signalled imminent changes Thursday. The central bank prefers inflation in the mid-point of its 3-6% target range and there's speculation the new target will be 3%, ING analyst Chris Turner says in a note. That means interest rates might need to stay higher for longer, he says. However, further rand gains will depend on Chinese growth prospects and global demand for South Africa's industrial commodities, he says. ING is "unsure on this front" and sees limited scope for further rand appreciation. The dollar trades flat at 18.0436 rand, close to the low of 17.9825 overnight. ([email protected])0948 GMT - The Romanian leu rises slightly ahead of the National Bank of Romania's meeting and the second round of Romania's presidential election. The central bank should leave interest rates unchanged in a decision at 1200 GMT but the focus will be on whether it mentions foreign exchange, ING's Frantisek Taborsky says in a note. The NBR has previously indicated it could relax currency interventions. Romania's election Sunday is also in focus after hard-right, eurosceptic George Simion won the first round, prompting Prime Minister Marcel Ciolacu to resign. The political turmoil sent the euro to a record high of 5.1445 leu on May 7. It last trades down 0.1% at 5.1063. The leu has stabilized but faces renewed losses, Taborksy says. ([email protected])0945 GMT - BlueBay Asset Management sees room for 30-year U.S. Treasury yields to breach 5%, CIO Mark Dowding says in a note. This would partly reflect fading recession fears recede, but also debt investors' concerns about the U.S. budget, he says. BlueBay considers 10-year Treasury yields at 4.5% to be reasonable but says they risk moving higher than that. "We see risks toward higher yields at the longer end of the curve," Dowding says. The 30-year Treasury yield falls 4.5 basis points to last trade at 4.875%. The 10-year yield is 4 basis points lower at 4.412%, according to Tradeweb. ([email protected])0934 GMT - The weakness in the superlong maturity segment of the Japanese yield curve "clearly requires action by the Ministry of Finance and the Bank of Japan," Citi Research's Tomohisa Fujiki says in a note. A reduction in issuance and the integration of maturities for "rinban" operations in the superlong sector are the responses that would be the simplest to implement. Rinban operations are the BOJ's purchase operations to manage the yield curve. "We would expect the curve to flatten if action is taken, but the medium-term impact is likely to be limited," he says. The 30-year Japanese bond yield last traded 1 basis point higher at 2.952%, according to LSEG. ([email protected])